Construction workforce must double within two years to build major projects

Australia's shortage of construction workers for major projects is set to hit 300,000 by the middle of 2027, as a burst of new energy and housing builds puts further strain on the sector.

A new report from Infrastructure Australia documented a record $242 billion worth of major projects slated for the next five years, up from last year's estimate of $213 billion.

The independent agency said the workforce was 141,000 shy of what was needed today, which is an improvement on previous estimates of the gap, but it is set to balloon quickly when the project pipeline peaks in 2027.

The current construction workforce for major projects is just over 200,000, which means it will need to more than double to reach the necessary half a million in time.

"Governments are doubling down on energy transmission and housing projects in a bid to meet their targets, while continuing to deliver the major transport projects we need," Infrastructure Australia chief executive Adam Copp said.

Mr Copp said the projects represented "once-in-a-generation" opportunities but would not come without challenges for the market, especially given that building in Australia was less efficient now than it was in the mid-1990s.

"We need to do more with less," he said.

Transport the lion's share, but energy growing

Just over half of the estimated pipeline is transport infrastructure, such as road and rail projects. But the agency said this category was relatively "steady" from year to year and had only grown by 2 per cent since the last estimate.

Building infrastructure, a category that includes large housing projects, grew a little faster at 8 per cent and accounts for a third of the total.

Most of the movement came in the utilities pipeline, a category that includes energy projects. It grew from $20 billion to $36 billion in the space of a year, most of which the agency said was due to transmission lines.

Because those lines stretch over large distances, the agency forecast that much of the activity would be in regional areas, where the worker shortage was the most acute.

Whereas the shortage of urban construction workers is forecast to almost vanish by 2029, the regional shortage is forecast to quadruple inside of a year.

Engineers, scientists and architects are mostly at the centre of the current shortage, but there will be a growing need for trades workers and labourers in the coming months, and there is also a shortage of project managers.

The agency said federal and state government workforce initiatives, such as TAFE and apprenticeship subsidies, migration fast-tracking measures, and reforms to licensing arrangements for electricians, were easing the crunch but that better coordination was needed.

It also identified a skills gap for energy construction.

"The sector faces a dual challenge: filling critical roles in sustained short supply and upskilling the workforce for the digital and net zero transition," the report read.

"[Energy] companies are adopting a cautious 'wait and see' approach to workforce and skills investment, rather than committing to long-term training or efforts to boost baseline workforce supply.

"There is currently ambiguity around exactly how … workers can transition across adjacent sectors."

Working smarter

Infrastructure Australia's estimates of the workforce gap are based on what the construction sector is currently able to achieve with the labour, machinery and know-how it has.

That means that the gap could also be closed by improving efficiency, rather than adding hundreds of thousands of workers.

The agency identified the sector's sluggish productivity was a significant problem, one governments were beginning to address but would require a sustained effort to fix.

"Productivity in Australia's construction sector remains stubbornly low," the report stated.

One of the reasons is widespread subcontracting, where companies delivering projects outsource their work and workforce to "lower-tier" providers to save money.

The agency argued procurement processes obsessed with achieving the lowest-possible cost were partly to blame, leading to cheaper outcomes rather than better outcomes and stifling the sort of innovation that could unearth better ways of building.

"We need to start investing in innovation rather than fixating on delivering at the lowest possible cost," Mr Copp said.

The agency said the slow process for environmental approvals was also contributing to the pipeline crunch, saying the government's efforts to streamline environment laws could help to get projects moving faster.

It also found evidence that businesses were failing to adequately factor in slow approvals at the planning and fundraising stage.

"Environmental approvals are often addressed later in the project life cycle — sometimes after the business case is developed, funding secured, timelines set, and designs scope," it said.

"This can create challenges … where requirements are discovered progressively during delivery."

It also identified a vulnerability in the supply chain for building materials, saying that recycled materials could be used more and that Australia's domestic steel-making capabilities were vulnerable.

The agency said the joint federal and SA government undertaking to take over the Whyalla Steelworks, which produces three-quarters of Australia's structural steel, could help overcome "quality concerns" about cheaper imports.

Editor's note (13/11/2025): An earlier version of this story said the construction workforce would need to double in two years to meet new demand. The Infrastructure Australia report was referring specifically to the construction workforce to build major projects. The story has been updated to reflect this.